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In 2008, Congress enacted the National Guard and Reservists Debt Relief Act of 2008 which allowed servicemembers, who have served on active duty for at least 90 days to be exempt from completing and satisfying the means test requirements set out in Section 707(b)(2)(A) in a Chapter 7 case filed between December 19, 2008 and December 19, 2011. The exemption must be claimed while the servicemember is on active duty or with 540 days after they have completed a minimum 90-day period of service to claim the means test exemption.
The story goes that a farmer bought a mule from a salesman who told him that if he were polite to the mule, it would do whatever he wanted. After months of being nice – but with no success in getting the mule to work, the farmer asked the salesman for help. The salesman came over, hit the mule on the head with a 2x4 and explained that you did have to be nice – “but first you had to get the mule’s attention.”
In 2009, the bankruptcy courts for the Districts of Rhode Island and New York began loss-mitigation programs, whereby the court may order a homeowner and loan servicer to try in good faith to negotiate a settlement that would be preferable to foreclosure for all parties. [1] Under these programs, the servicer is required to provide a negotiator with the authority to modify and/or settle. There is no requirement that the parties reach a settlement, and all settlements under the loss-mitigation programs are consensual.
“But as the collapse of Lehman Brothers showed, the Bankruptcy Code is not an effective tool for resolving the failure of a global financial services firm in times of severe economic stress.”
Treasury Secretary Timothy Geithner, Oct. 29, 2009
The “rationalization”—read, reduction—of Chrysler and GM’s dealership networks has taken center stage in their respective government-led restructurings. In total, just under 800 Chrysler dealers have had their franchise and related agreements formally rejected under bankruptcy law, while approximately 2,000 GM dealers have either experienced a similar fate or they have entered into “wind-down” agreements allowing them to continue operating through October 2010.
On Jan. 27, 2009, the House Judiciary Committee approved the Helping Families Save Their Homes in Bankruptcy Act of 2009 by a vote of 21-15, and reported it to the full House. The bill is expected to be folded into the 2009 Omnibus Appropriations Bill, slated for imminent consideration in the House. Introduced by Sen. Richard Durbin (D-Ill.), H.R. 200 delegates authority to bankruptcy judges to rewrite first mortgage terms by lowering the value of a mortgage to the current market value of the property, reducing interest rates and extending loan maturity.
With the recent economic turmoil, there have been rumors that the current 110th Congress may address modification of 11 U.S.C. §1322(b)(2). If not addressed by the 110th Congress in its waning days, legislation most certainly will be introduced in the 111th Congress to make primary home mortgages subject to cramdown.
The federal judiciary has not had a substantial pay raise since 1991, but on January 31, 2008 the Senate Judiciary Committee marked up and approved the Federal Judicial Salary Restoration Act of 2007 (S. 1638) by a vote of ten to seven. Notably, the mark up included an amendment by Senator Feingold (D- WI) to limit judicial gifts related to attendance at privately-funded educations trips and seminars (Feingold Amendment). The next stop would be the Senate floor, but sources say the addition of the Feingold Amendment could doom final passage.
Representative Miller (D–N.C.) introduced H.R. 3915 on Oct. 22, 2007 on his own behalf and on behalf of Representatives Watt (D–N.C.) and Frank (D–Mass.). The bill would enact the Mortgage Reform and Anti-Predatory Lending Act of 2007 (MRAPLA). MRAPLA includes three titles, each of which deals with residential mortgages. The provisions of MRAPLA are complex, and not all of them can be addressed in this short summary. This introduction notes some of the more important provisions of Titles I, II and III.
H.R. 3609. This bill, entitled the “Emergency Home Ownership and Mortgage Equity Protection Act of 2007,” was introduced by Rep. Brad Miller (D-N.C.) and Rep. Linda Sanchez (D-Calif.) on Sept. 20, 2007. A hearing was conducted on this bill before the House Judiciary Subcommittee on Commercial and Administrative Law on Sept. 25, 2007, and the bill was “marked up” on Oct. 2, 2007.
